(5) Limit the size of cash transactions at temporary or
remote locations and/or require people presenting large items to complete
the transaction inside the financial institution office;
(6) Use cameras.
CLOSED ACCOUNT FRAUD
Closed account frauds are based on checks
being written against closed accounts. This type of fraud generally
relies upon the float time involved in interfinancial institution transactions.
Example: A fraud ring provides “role players” with business
checks drawn on closed accounts at a financial institution. The “role
players” deposit the checks into a new account at a different
financial institution through one or more ATMs operated by other financial
institutions. The float time between the ATM deposits and the checks
drawn on the closed accounts reaching the issuing financial institution
for payment allows the criminals to withdraw funds from the new account.
Closed account frauds can be successful when customers do not destroy
checks from unused accounts or do not properly inform their banks
of account status.
To protect against such frauds, customers should:
(1) Keep their financial institutions informed of the status of accounts;
(2) Actively close unneeded accounts rather than merely abandon the
account; and
(3) Destroy checks from dormant/inactive or closed accounts.
Financial institutions should:
(1) Place special holds on checks drawn on accounts that have been
inactive for some time;
(2) Send a letter to customers of
(3) Advise customers to destroy checks from closed accounts and to
notify the financial institution.
RETENTION OF RECORDS
Occasionally the question comes up about what the rules are for keeping
or destroying files, especially loan officer comments. The law is
pretty succinct on the subject – North Dakota Century Code §
6-08-23 provides only that:
“No bank may be required to preserve and retain its records
of accounts or files for a longer period than six years next after
the first day of January of the year following the date of such record
or files.”
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In plain English, if October 25, 2002,
is the last date any action was taken or any notation or addition
was made to the file, January 1, 2003, starts the six-year retention
period.
Consequently, the file must be retained until January 1, 2009. We
interpret “records” to mean not just the promissory note,
mortgage, security agreements and other loan documents but rather
the entire file, including the loan officer comments. Case law indicates
that loan comments and notations kept in the ordinary course of the
bank's business to record the history of each particular loan are
a part of the records of the file or of the account. See, e.g.
Delzer v. United Bank, 484 N.W.2d 502 (N.D. 1992).
With regard to a banking institution exercising fiduciary powers,
it must keep its fiduciary records separate from other records of
the bank. The fiduciary records must contain full information relative
to each account; the institution must also keep an “adequate”
record of all pending litigation to which it is a party in concerning
its exercise of fiduciary powers. Records must be retained for three
years from the termination of the fiduciary account relationship or
three years from the termination of any litigation relating to the
account, whichever is later. See N.D.C.C. § 6-05.2-03.
* * * * *
You are asking. . . .
How do we go about correctly determining the debtor's location?
(1) A debtor who is an individual is located at his principle residence;
(2) A debtor that is an
organization and has only one place of business is located at that
place of business; (3) A debtor that is an organization and has more
than one place of business is located at its chief executive office;
(4) A registered organization that is organized under the law of a
state is located in that state. We always suggest getting a copy of
the articles of incorporation or organization, Certificate of Limited
Partnership, or Fictitious Name Certificate – whichever is applicable.
Once that’s in hand, we also suggest double- checking with the
website of the Secretary of State.
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